Zillow: Pending Home Sales Fall 8.5% in an 'Early Winter'

Zillow's September Market Report describes a housing market that cooled sooner than usual, with high mortgage rates and the normal autumn slowdown working together.

The key numbers

• Closed sales: down 2.5% from a year ago, based on Zillow's preliminary estimate of about 319,000 homes

• Newly pending sales: down 8.5% year on year and 11.2% from August. This is the leading indicator for future closings

• Home values: the typical US home is worth $366,913, up just 1% from a year ago, and down 0.5% in the month

• Monthly payment: $1,922 on a typical home with 20% down, excluding taxes and insurance, which is 6.7% higher than last year (a year-ago payment of roughly $1,800, by our estimate)

Inventory

There were 1.39 million homes for sale, up 2.5% year on year, the 34th straight month of annual gains. New listings were only 0.4% above last September and about 11.9% below the pre-pandemic baseline.

Competition and price cuts

Homes took a median of 29 days to go pending, two days longer than a year earlier. The share of listings with a price cut was 27.4%, up from 26.2%.

 

What Zillow expects

Chief economist Mischa Fisher said the slowdown was predictable given where mortgage rates stand, and that sales should stay below last year's pace through the fourth quarter. He added that it is not out of the question that rates could fall as quickly as they rose, which would bring buyers and sellers back. The question, he said, is whether they would then wait until spring.

Affordability

A median-income household would need to spend 34.3% of its income on the typical mortgage payment, up from 33.7% a year ago.